Correlation Between Vanguard Total and Vanguard Inflation-protec
Can any of the company-specific risk be diversified away by investing in both Vanguard Total and Vanguard Inflation-protec at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Vanguard Total and Vanguard Inflation-protec into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Total Bond and Vanguard Inflation Protected Securities, you can compare the effects of market volatilities on Vanguard Total and Vanguard Inflation-protec and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Vanguard Total with a short position of Vanguard Inflation-protec. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Total and Vanguard Inflation-protec.
Diversification Opportunities for Vanguard Total and Vanguard Inflation-protec
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Vanguard and Vanguard is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Total Bond and Vanguard Inflation Protected S in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Inflation-protec and Vanguard Total is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Vanguard Total Bond are associated (or correlated) with Vanguard Inflation-protec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Inflation-protec has no effect on the direction of Vanguard Total i.e., Vanguard Total and Vanguard Inflation-protec go up and down completely randomly.
Pair Corralation between Vanguard Total and Vanguard Inflation-protec
Assuming the 90 days horizon Vanguard Total is expected to generate 1.38 times less return on investment than Vanguard Inflation-protec. In addition to that, Vanguard Total is 1.09 times more volatile than Vanguard Inflation Protected Securities. It trades about 0.06 of its total potential returns per unit of risk. Vanguard Inflation Protected Securities is currently generating about 0.1 per unit of volatility. If you would invest 2,287 in Vanguard Inflation Protected Securities on April 23, 2025 and sell it today you would earn a total of 37.00 from holding Vanguard Inflation Protected Securities or generate 1.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Total Bond vs. Vanguard Inflation Protected S
Performance |
| Timeline |
| Vanguard Total Bond |
| Vanguard Inflation-protec |
Vanguard Total and Vanguard Inflation-protec Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Total and Vanguard Inflation-protec
The main advantage of trading using opposite Vanguard Total and Vanguard Inflation-protec positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Total position performs unexpectedly, Vanguard Inflation-protec can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Vanguard Inflation-protec will offset losses from the drop in Vanguard Inflation-protec's long position.| Vanguard Total vs. Vanguard Total International | Vanguard Total vs. Vanguard Total Stock | Vanguard Total vs. Vanguard Total International | Vanguard Total vs. Vanguard 500 Index |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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